Link to Key Takeaways for D.C. Employers Key Takeaways for D.C. Employers
- Verify compliance with the new $17.95 minimum wage effective July 1, 2025.
- For government contractors and assistance recipients, ensure workers are paid at least the living wage rate tied to CPI adjustments.
- Review non-compete agreements to confirm they are limited to qualifying highly compensated employees and comply with statutory notice and duration requirements.
- Display the updated DOES Minimum Wage Poster once released.
Each year, the District of Columbia (the “District”) updates key labor and employment laws affecting local employers and workers alike. For 2026, important changes include new wage rates under the Living Wage Act of 2006 and the Minimum Wage Act, as well as revised compensation thresholds under the District’s non-compete law.
Employers operating in the District should review these developments to ensure policies, contracts, and pay practices remain compliant going into the new year.
Link to The Living Wage Act of 2006 – D.C. Code §§ 2-220.01–2-220.11 The Living Wage Act of 2006 – D.C. Code §§ 2-220.01–2-220.11
The Living Wage Act of 2006 requires the District’s government contractors and recipients of government financial assistance totaling $100,000 or more to pay employees working on those projects at least the current living wage rate.
The D.C. Department of Employment Services (“DOES”) reviews and adjusts the rate annually in proportion to the Consumer Price Index for All Urban Consumers in the Washington Metropolitan Statistical Area, as published by the U.S. Bureau of Labor Statistics.
- Effective January 1 – June 30, 2025: $17.50 per hour
- Expected Effective July 1, 2025: $17.95 per hour.
Pursuant to D.C. Code § 2-220.03(f), the living wage may never fall below the District’s minimum wage. As a result, the July 2025 increase in the minimum wage will trigger a corresponding increase in the living wage rate.
Employers receiving the District’s government funds or contracts should review pay rates to ensure compliance with the new wage thresholds for employees performing covered work.
Link to Minimum Wage Increase – D.C. Code § 32-1003 Minimum Wage Increase – D.C. Code § 32-1003
Effective July 1, 2025, the District’s minimum wage will increase from $17.50 to $17.95 per hour for all employees, regardless of employer size.
Under D.C. Code § 32-1003(a)(6)(A), the minimum wage is adjusted annually in proportion to the Consumer Price Index, rounded to the nearest $0.05. The 2024 CPI increase of 2.7% for the Washington Metropolitan Area prompted this year’s upward adjustment.
Tipped Employees: The base wage for tipped employees will remain $10 per hour. If an employee’s tips combined with the base wage do not equal the full minimum wage of $17.95 per hour, the employer must make up the difference.
The DOES will issue updated D.C. Minimum Wage Posters, which all employers must display in a conspicuous location at each worksite. The posters can be assessed here.
Link to Non-Compete Restrictions – D.C. Code §§ 32-581.01–.05 Non-Compete Restrictions – D.C. Code §§ 32-581.01–.05
The District continues to enforce its comprehensive ban on non-compete agreements for most employees. As of January 1, 2025, non-competes are prohibited for:
- Employees earning less than $158,363 per year, and
- Medical specialists earning less than $263,939 per year.
These salary thresholds are adjusted annually in line with CPI increases. Employers may not retaliate against employees who refuse to sign or comply with a non-compete agreement, or who raise questions about its validity or applicability.
Permissible Non-Competes: Employers may continue to use non-compete agreements for highly compensated employees who earn above the applicable thresholds, provided the agreements:
- Clearly define the functional scope of the restriction (e.g., roles, services, or industries covered);
- Specify the geographical limitations;
- Limit the restriction to 365 days post-employment for non-medical employees, or 730 days for medical specialists; and
- Are provided at least 14 days before the start of employment or the agreement’s effective date.
Employers also may not retaliate against highly compensated employees who seek information or clarification about non-compete provisions.
If you have any questions about the information in this post, please contact the authors or your Dykema relationship attorney.